Saudi Arabia's massive crude oil exports are increasingly being restructured to depend on a single narrow maritime corridor.

After the war with Iran, the country actively utilized the Red Sea route to bypass the Strait of Hormuz, but this alternative is now threatened by escalating attacks from Houthi rebels. As a result, Saudi crude is increasingly likely to be forced into longer and more costly shipping routes via the Suez Canal and around Africa's Cape of Hope.

▲ Saudi Oil Exports Shaken as Red Sea Bypass Strategy Falters

According to the Wall Street Journal (WSJ) on the 26th (local time), since the war with Iran began, Saudi Arabia has expanded its method of transporting crude oil produced in eastern oil fields through the East-West Pipeline to the Red Sea coast, then exporting it to Asian markets via the Bab el-Mandeb Strait. This was a key strategy to bypass the Strait of Hormuz.

However, as Houthi rebels have repeatedly attacked Saudi vessels, this alternative route has become unstable. As a result, Saudi crude oil now faces the need to choose more complex routes either passing through Egypt's Suez Canal or circumnavigating Africa.

▲ Tankers Changing Routes in Succession…Sharp Increase in Suez Passage Volume

According to ship tracking company Vortexa, at least four Saudi crude carriers changed direction this week ahead of entering the Bab el-Mandeb Strait at the southern end of the Red Sea and headed north toward the Suez Canal.

Saudi Arabia has also begun expanding the volume of crude oil loaded at Egyptian Mediterranean ports. During the first three weeks of July, maritime crude oil throughput via the Suez Canal reached its highest level in the past two and a half years, and inflows to the Sumed pipeline connected alongside the canal increased 50% compared to the previous month.

▲ War Redraws the Global Crude Oil Logistics Map

This route change is evaluated as an example showing how prolonged Middle Eastern conflicts are reconfiguring the global crude oil supply chain.

Gulf oil-producing countries including the United Arab Emirates (UAE) and Kuwait are accelerating efforts to build new export routes to bypass the Strait of Hormuz. Iraq also announced plans to conclude an agreement to construct a new pipeline connecting through Syria to the Mediterranean.

▲ Concerns Over International Oil Prices Breaking Through $100 Per Barrel Again

The market forecasts that if Middle Eastern maritime transport risks persist, international oil prices could significantly exceed $100 per barrel again.

This is raising concerns that it could reignite global inflation and place additional burdens on an already fragile global economy.

▲ Bab el-Mandeb Also Faces Possible Blockade…Pressure on Iran Intensifies

Analysis indicates that the Suez route is also not a safe zone.

Recently, senior officials of Iran's Islamic Revolutionary Guard Corps (IRGC) reportedly warned that if the United States expands attacks or considers ground troop deployment, they could also review options to blockade the Bab el-Mandeb Strait and the Red Sea and directly attack ships.

Saudi Arabia and Egypt have attempted to ease tensions with the Houthi rebels but have achieved little progress to date.

▲ "Asian Export Costs Surge…Oil Price Pressure Expands"

Gregory Brew, senior analyst for energy and Iran at Eurasia Group, analyzed that while Saudi Arabia can still export crude oil through the Red Sea, the distance to Asian markets becomes much longer and costs increase significantly.

He diagnosed that this situation will ultimately increase upward pressure on international oil prices.

▲ Houthi Attacks Expand…Saudi Arabia and U.S. Military Response

Saudi media reported that a Saudi vessel was attacked in the Red Sea last Friday.

The Saudi military said it responded by conducting airstrikes on Houthi rebel positions near the port of Hodeidah.

Earlier this week, a tanker caught fire after being hit by an unidentified projectile in Saudi southern waters, and Houthi rebels claimed to have attacked two Saudi-flagged vessels using missiles and drones.

U.S. President Donald Trump also warned that if the Houthis carry out additional attacks, both the Houthi forces and Iran will face strong military retaliation.

The U.S. military also announced it conducted 13 consecutive days of airstrikes targeting military facilities within Iran, drone storage facilities, and maritime assets.

▲ Simultaneous Shocks in Middle East and Russia…Double Pressure on Energy Markets

The Red Sea crisis is acting as another adverse factor amid already declining cargo volumes through the Strait of Hormuz and Ukraine's attacks on Russian energy facilities.

As the conflict drags on, the market's supply capacity has significantly diminished, and crude oil prices are rising rapidly reflecting the possibility of further supply disruptions.

Brent crude futures traded at approximately $97 per barrel on Friday, and briefly surpassed $100 the previous day.

▲ Goldman Sachs: "International Oil Prices Could Reach $120"

Gregory Brew forecasts that if the war continues, international oil prices could remain at the $100 level for an extended period.

Goldman Sachs also presented the possibility in its report this week that in the worst case, international oil prices could rise to $120 per barrel.

Helima Croft, head of global commodities strategy at RBC Capital Markets, analyzed that continued Houthi attacks could substantially reduce crude oil transport volumes in the Red Sea, potentially changing the existing perception that "the market will eventually find workarounds."

▲ Saudi Arabia's Key Bypass Route, the East-West Pipeline, Also Has Limits

After the war, Saudi Arabia expanded Red Sea export volumes through the East-West Pipeline from approximately 700,000-1,000,000 barrels per day to about 4.9 million barrels.

This represents approximately 5% of global crude oil supply.

Of this, approximately 3.5 million barrels passed through the Bab el-Mandeb Strait and headed mostly to Asian markets.

However, analysis indicates that if this route becomes dangerous, the only remaining option is essentially the Suez Canal.

▲ Suez Canal: Alternative Route but Not Complete Solution

The Suez Canal is evaluated as capable of serving as an alternative route for Saudi crude oil exports but not a complete solution.

This is because the canal's shallow depth prevents very large crude carriers (VLCCs) from passing through at full capacity.

In such cases, ships must unload approximately half their cargo at Suez Bay and then transfer the crude through the Sumed pipeline to the Mediterranean.

Subsequently, the lightened vessel passes through the canal and reloads the crude, or separate vessels take receipt of the cargo.

Alternatively, cargo can be distributed and transported by two Suezmax-class tankers.

▲ Asian Transport Delayed Up to a Month…Freight and Insurance Rates Surge

Experts analyzed that transit times via Suez to Asia could increase by approximately 20-30 days from the previous schedule.

As sailing times lengthen, vessel turnover rates decline and both freight rates and war risk insurance premiums rise together.

In particular, product tankers carrying diesel and jet fuel have higher dependence on the Suez Canal than crude carriers, raising the possibility that fuel markets could be more significantly impacted.

▲ Sumed Pipeline Born from Past Crisis…Gains Attention Again

The Sumed pipeline is a product of past Middle Eastern conflicts.

The Suez Canal, which opened in 1869, was closed from 1967 after the Third Arab-Israeli War until 1975, and this prompted the construction of the Sumed pipeline connecting the Red Sea and Mediterranean via land.

The pipeline has operated in full since 1977, serving as critical infrastructure complementing the Suez Canal.

▲ "If Iran Controls Both Straits, It Maximizes Leverage"

This incident demonstrates that there are clear limits to bypassing strategic maritime chokepoints in the Middle East.

Edward Fishman, director of the Center for Geoeconomics at the Council on Foreign Relations (CFR), analyzed that if Iran, in cooperation with Houthi rebels, controls or blockades both the Strait of Hormuz and the Bab el-Mandeb Strait simultaneously, it would secure far more powerful leverage against the United States and Gulf countries.

He forecasted that Middle Eastern geopolitical risks will continue to be one of the most important variables in the international energy market going forward.